I don't want to step into a can of worms here, but SP, you are right about how inventory is handled, and zsimpson, you did suggest the purchase of stock "as an tax saving" method to others---

No, that is not what I said. Someone posted that they wanted to make extra money. I told them what we did and suggested that she might consider Ebay as a way to make money. At that point, SP decided that it was his business what was going on with my f-ing tax returns. I did not suggest that she put money into inventory as a way to avoid taxes. Part of the reason I am able to do that is because it is also part of business start-up expences, along with a couple dozen other ways. Now, I flat out refuse to send SP my tax returns for the year, no matter All-Knowing he may think he is, and I am truly sorry that I even bothered to try to help someone else.

This is the exact quote that started it all: I started a small business selling stuff on Ebay with the thoughts that if I put some money into inventory, it would be that much less that we had to pay taxes on, and I could always sell it the next year and make the money back when we didn't have a large single year income.

Well, Hubby got the "golden handshake" which turned out to be copper colored instead of gold. At the same time, the Ebay business has been taking off. Hubby thought it was a really cute little hobby until he found out how much was actually coming in from it. It isn't enough to live on completely, but it supplements our income enough that his retirement fund is plenty.